Bundesbank cuts remuneration of government deposits to 0%
Measure could further reduce availability of high-quality collateral in the eurozone
The Deutsche Bundesbank’s executive board decided on August 4 to reduce the remuneration of domestic government deposits to 0%.
The measure will come into effect on October 1, and could worsen the shortage of high-quality collateral in the eurozone.
Germany’s central bank did not provide a rationale for its decision in its short statement announcing the move. The central bank simply referred to two previous adjustments introduced by the European Central Bank on this topic.
The ECB first
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